Franklin Company uses activity-based costing, and normally produces 1,000,000 units per month. At this level of production, the costs per unit are as follows:

Direct materials used$14

Direct labor$6

Variable indirect production$1

Setup costs$3

For 1,000,000 units, 500 setups are required at a cost of $6,000 per setup. The company has received a special order for 100,000 units at $22

per unit. The company has excess capacity. The company estimates that 5 setups will be required for the special order. What is the cost of the special order?

The answer is not: 2,400,000

Franklin Company uses activity-based costing, and normally produces 1.000.000 units per month. At this level of production, the costs per unit are as follows: Direct materials used$14 Direct labor$6 Variable indirect production$1 Setup costs$3 For 1.000.000 units. 500 setups are required at a cost of $6,000 per setup. The company has received a special order for 100,000 units at $22 per unit. The company has excess capacity. The company estimates that 5 setups will be required for the special order. What is the cost of the special order? $2,400,000 $2, 430,000 $2,100,000 $2,130,000